Bookmark this page on your mobile

QR Code image

What is this?

Daily Court Reporter - News ECOT inflated time claimed for students, failed to document time spent learning, audit finds

 

ECOT inflated time claimed for students, failed to document time spent learning, audit finds

The Electronic Classroom of Tomorrow (ECOT) inflated the amount of time it claimed its students were engaged in learning by failing to deduct the time students were inactive online, according to an audit released recently by Ohio Auditor Dave Yost.

State auditors also found ECOT provided no documentation to show its students were engaged in learning during the time it claimed for payment. Despite receiving information showing only when a student was logged on – but not what they were doing – the Ohio Department of Education paid the school for 81.5 percent of its requested funding.

Auditor Yost has referred the audit and related work papers to the U.S. Attorney’s Office and the Franklin County Prosecutor’s Office for possible criminal prosecution. In addition to information obtained by auditors during the financial audit, the Auditor has preserved relevant information from ECOT’s computers and computer servers. Although the 2016-17 audit is complete, the office’s investigation continues.

“Our auditors documented that ECOT officials had the ability to provide honest, accurate information to the state and they chose not to,” Auditor Yost said. “By withholding information, ECOT misled state regulators at the Department of Education, and ECOT was paid based on that information. I believe this may rise to a criminal act.”

The audit includes a $249,962 finding for recovery related to political advertisements attacking members of the Ohio General Assembly and Ohio Department of Education. The finding is against Third Wave Communications LLC, Altair Learning Management Inc., and IQ Innovations LLC, jointly and severally, in favor of the Electronic Classroom of Tomorrow Enterprise Fund. The three companies are controlled by William Lager, the founder of ECOT.

ECOT officials declined to sign a routine letter attesting that they provided all information needed for the Auditor’s office to perform the audit, that the information was accurate and complete, and that they made auditors aware of any potential fraud or violations of relevant rules or law. As a result, auditors could not issue an opinion on ECOT’s financial statements.

Auditors found:

Nearly 94 percent of the time ECOT submitted to support its claims for funding came from ActivTrak, tracking software that records all activity on a computer, including which websites, documents or programs a student is using and for how long. ECOT did not include this important data in what it submitted to ODE.

The number of unique data sources or records ECOT obtained during 2017 totaled 211,298,592 while its 2016 data sources totaled 6,542,249. ActivTrak was responsible for 197,691,197 of those records. However, ECOT did not submit information to ODE detailing what students were doing during the time tracked by ActivTrak.

With the exception of a minor variance, the Ohio Department of Education was satisfied with ECOT’s claim for time without evidence supporting the student participation in learning and without deducting idle or inactive time.

“With the level of incompetence displayed by both the school and ODE, the regulator, it’s amazing that any money went to education whatsoever,” Auditor Yost said. “The Department of Education did not require proof that the students were engaged in learning, and ECOT was more than happy to oblige in providing watered-down information that the Department inexplicably accepted, even though they knew more-detailed information was available.”

The state’s manual for determining fulltime equivalency (FTE) funding for students states: “eSchools may have systems that track learning opportunity participation that take place within the school’s online system. If an eSchool’s online system has this capability, then the school must produce Excel spreadsheets showing the daily/weekly/monthly accounting of learning opportunities and the final total of all online learning opportunities that the student participated in and were tracked by the eSchool’s system.”

Despite the requirement, ODE paid the school for 81.5 percent of its request for funding without the necessary learning opportunity documentation.

Beginning in 2013, the Auditor’s office has identified serious deficiencies in the system Ohio uses to fund virtual schools. The General Assembly made significant improvements toward accountability by passing House Bill 2 in 2015 at the Auditor’s request. “Clearly, more work is needed,’’ Auditor Yost said. “The Department of Education cannot be trusted to fix these problems. The General Assembly needs to act because what is happening remains unacceptable.”

Data collection

State auditors were not surprised by the dramatic increase in records ECOT gathered for its FY2017 audit. During the FY2016 audit, ECOT officials explained to state auditors that they would begin using ActivTrak on all school-supplied computers as a way of capturing the time students were learning on their computers, including online. This was an attempt to meet ODE’s new requirements for documenting student engagement in learning.

State auditors expected ActivTrak would capture so much information that it would be extremely difficult for ODE to properly evaluate the data to determine whether it supported the funding of students. However, because the software documents which websites, activities and programs users are engaged with, ECOT would have the ability to accurately document and report student participation. ECOT did not provide that information to ODE.

Auditors found ECOT presented ODE with a spreadsheet detailing an engagement date, start time, end time and duration in seconds. However, that time did not provide any detailed information, such as what program, application, or website a student was spending their time within as required by the Department’s FTE manual.

“No evidence of idle time was identified, reported, or removed in the documentation provided to AOS,” auditors wrote. “Therefore, AOS was unable to determine how much of the time presented by ECOT for review was time spent by a student participating in actual learning opportunities and how much of the time presented was spent idle or on activities not educational in nature.”

Auditors also found that often an individual student's spreadsheet submitted as support for establishing the FTE would contain thousands and sometimes tens of thousands of rows of data showing the session date, start time, end time and duration, but provided no support that the time was academic in nature.

In one student’s case, it was reported that the student had 8,857.89 hours of ActivTrak time during FY2017, which is 97.89 hours more than what is possible in a year. (One year is equal to 8,760 hours.) Schools are required to capture durational time and then cap hours to a maximum of 10 per day, and to eliminate any time which may have been duplicated – which ECOT did. Auditors could find no evidence that ECOT met the requirement that schools reduce non-educational time.

ECOT reported its FTE based on a student’s enrollment hours, as was the practice in previous years. Auditors wrote, “ECOT’s procedure to report FTE during fiscal year 2017 was to assess FTE based on the period between a student’s enrollment date and withdrawal date, if applicable, or the last day of school. …While ECOT did have policies and procedures in place during the audit period to capture the duration of time a student was engaged in learning opportunities, ECOT did not adjust FTEs … based on the duration of time engaged in learning for each student. Therefore, ECOT over-reported FTEs.” The reporting of enrollment was declared a material weakness by state auditors.

As is standard practice, ODE performs school FTE reviews before the Auditor of State conducts its annual financial audit. ODE’s review, dated Sept. 28, 2017, said 11,575.47 FTE of the 14,203.03 FTE claimed as enrollment by ECOT could be substantiated. Auditors found that the Department of Education was given a formula by ECOT to perform its final calculations (the formula deducted any hours above 10 in a day and time that was duplicated), which closely matched what ODE paid ECOT.

The ECOT Informant

In May 2017, an individual identifying himself as an employee of ECOT contacted the Auditor of State’s office saying he had information to show how the school was manipulating data to increase its funding. The lead staff auditor assigned to the ECOT audit contacted the individual and twice met with him. Two criminal investigators with the Public Integrity Assurance Team (PIAT) interviewed the individual, also.

The information confirmed what the audit staff knew about how ActivTrak gathered information and how ECOT might utilize the information given the weaknesses in the Department of Education evaluation process of online schools. However, until the school year was complete and ECOT submitted its FTE report, the Auditor of State could not begin compliance testing. Schools have until July 31 each year to correct their FTE submissions.

Testing by the Auditor’s staff confirmed what the auditors suspected: ECOT officials did not provide information detailing inactive time by students, nor did they report sufficient detail to prove educational engagement activity.

“I commend this individual for showing the courage to come forward and speak up,” Auditor Yost said. “What the complainant could not have known is how much our staff already knew. Our auditors knew what ECOT was collecting, the weaknesses in ODE’s requirements and procedures, how an unscrupulous operator could take advantage of these weaknesses and they created a comprehensive audit plan to sniff it out. As we suspected, ECOT took maximum advantage of the situation and may have violated the law in the process.”

Referral for Possible Prosecution

Auditors found no evidence that ECOT deducted idle time or the time students spent online in non-educational activities from its funding request of the state, even though ActivTrak collects this information. As a result, Auditor Yost believes school operators may have committed one or more crimes.

“ActivTrak monitors all activity and ECOT administrators had that information available to them,” Auditor Yost said. “Instead of doing the right thing and subtracting non-educational time and idle time from their students’ school day, ECOT misled the Department of Education and submitted inflated timesheets – garnering an improper windfall for the school.”

Other virtual schools that use ActivTrak report idle time separately from student learning time, giving the Department of Education discretion on whether to pay for idle time.

Yost said the prosecutors will be able to review the audit work papers and electronic data auditors collected during the financial audit. In addition, information preserved from ECOT’s computers and computer servers will be available as well.

Findings for Recovery: Unlawful Advertising

On June 13, 2017, an invoice in the amount of $249,962.75 related to political advertisements supporting ECOT was submitted to ECOT by Midwest Communications & Media. In an article published in The Columbus Dispatch on June 24, 2017, a spokesman for ECOT said public funds were being used to fund the advertisements. The same day, Auditor Yost sent a letter to ECOT demanding it cease using tax dollars for the advertisements because the content was not a proper public purpose.

Auditor Yost also directed staff to issue subpoenas to ascertain beyond a reasonable doubt who paid for the advertisements.

According to records obtained via subpoena, Midwest Communications was paid by Third Wave Communications LLC. According to ECOT’s records, Third Wave Communications has common ownership with Altair Learning Management Inc., ECOT’s management company, and IQ Innovations LLC.

On June 28, 2017, four days after Auditor Yost issued a cease and desist order to ECOT, the director of operations at Altair Learning instructed an official at IQ Innovations to pay the $249,962.75 invoice from Third Wave Communications’ account. Amy Davis, the marketing and project coordinator at IQ Innovations, is identified in Third Wave’s contract with ECOT as a consultant. Third Wave’s bank records show payment was made on the date the Altair official requested payment. Investigators from the Auditor’s Public Integrity Assurance Team could find no reason for Third Wave Communications to pay the invoice submitted to ECOT as it had not paid other invoices. Investigators also found previous advertising was paid directly by ECOT.

“We believe those who controlled the purse strings at ECOT and its affiliated businesses were trying to find a way to disguise the fact ECOT was using tax dollars for an improper purpose because we were asking questions,” Auditor Yost said. “ECOT’s spokesman said they were using tax dollars for the political advertisements and, after a protracted battle to subpoena records, we believe ECOT used tax dollars for the political advertisements by funneling the money through its various companies.”

Auditors wrote: “The invoice from the media buyer, Midwest Communications & Media, originally went directly to ECOT for payment, as had every other invoice for media advertisements. The only reasonable understanding of this process is that it was designed to disguise the use of public money to pay for the non-public purpose of the lobbying ad.”

“An agent may not lawfully do an act that the principal could not lawfully do for himself. The advertisement was invoiced by Midwest Communications & Media to ECOT. Altair Management, Inc. on behalf of ECOT, directed a related private entity, which received public dollars, to pay the invoice on behalf of ECOT,” state auditors said.

A full copy of the report is available online at: https://ohioauditor.gov/auditsearch/detail.aspx?ReportID=138083

About the Ohio Auditor of State

The Auditor of State’s office, one of five independently elected statewide offices in Ohio, is responsible for auditing more than 5,900 state and local government agencies. Under the direction of Auditor Dave Yost, the office also provides financial services to local governments, investigates and prevents fraud in public agencies and promotes transparency in government.

Date Published: May 28, 2018

 

Ohio Auditor of State

 

Supreme Court of Court affirms death sentence for teen’s murderer

The Ohio Supreme Court took into account the fact that a man who plotted to rob and kill a childhood friend had just turned 19 years old at the time of the murder, but that was not enough to reverse the death penalty he received from a Warren County court.

Lawmakers mull local self-defense statutes

House lawmakers recently considered further testimony both for and against a bill that would codify an affirmative claim of self defense for Ohioans who own and use guns.

State hires law firm to remove sealed records faster for background checks

The state of Ohio has hired a law firm to remove former offenders' sealed criminal records from background check company databases faster.

If it can rain, it can flood: Why flood insurance is a wise bet for homeowners

(BPT) The federal government considers floods the nation's most common natural disaster. They strike every state and leave homeowners with huge repair costs. Why? Because typical homeowners insurance doesn't cover flood damage.

Common Good: Mental health and criminal justice

More than 383,000 adults with serious mental illnesses are being held in a U.S. jail or prison, according to the nonprofit Treatment Advocacy Center. Of the 64,000 people jailed or imprisoned in Ohio in 2005, more than 10,000 were estimated to have serious mental illnesses.

SBA partners with veterans employment program

The U.S. Small Business Administration announced this week a partnership with the U.S. Department of Veterans Affairs to give service members access to self-employment assistance to kickstart any untapped entrepreneurial spirit in the ranks of American heroes.

State lawmakers move to make 'spoofing' phone numbers illegal

Lawmakers keen on quashing the practice of manipulating parts of or entire phone numbers to obfuscate the caller's identity for purposes of defrauding the call recipient are expected to consider a bill that would make the trick a criminal offense.

Bond issue proposed to attack toxic algae blooms

A pair of state lawmakers whose districts abut Lake Erie recently proposed a solution to the dangerous algae blooms that take over swaths of the state's Great Lake each summer.

Trucker and 10 others convicted for cheating BWC

Agency owed more than $500,000 in restitution

Ohio Wildlife Council approves 2018-2019 hunting regulations

The 2018-2019 hunting and trapping seasons were among the regulations approved by the Ohio Wildlife Council at its scheduled meeting on Thursday, May 17, according to the Ohio Department of Natural Resources (ODNR).

Prevention and self-management can ensure healthy lives with chronic conditions

The Ohio Department of Aging works every day to provide resources for individuals and communities to help our elders live as independently as possible, for as long as possible, in the settings they prefer. As we age, many of us will develop chronic conditions, such as diabetes, heart disease or arthritis, and with the right supports, we can continue to thrive.

Report finds nearly 60,000 ohioans homeless in 2016

The Ohio Human Services Data Warehouse (OHSDW) has released the first in a series of groundbreaking reports exposing the troubling extent of Ohio's homelessness crisis. It finds that 58,484 Ohioans received homeless services in 2016 from seven of Ohio's nine Continuum of Care (CoCs) organizations; that's more than the entire population of Vinton, Monroe, Noble and Morgan counties combined.

Columbus gets contradictory reports on people moving there

Recent studies offer a mix perspective on central Ohio migration.

CAANE Elder Celebration - June 7, 2018

Local seniors are invited to attend a day of workshops and gain information about healthy lifestyles and how to protect themselves against abuse, neglect and exploitation. The CAANE Elder Celebration will be held Thursday, June 7, from 10 a.m. to 2 p.m. at the Trotwood YMCA (506 E. Main St., Trotwood OH 45426).

County Commissioners to appoint Michael Colbert as County Administrator

Montgomery County Commissioners Judy Dodge, Dan Foley and Debbie Lieberman have announced the selection of Michael Colbert as the next Montgomery County Administrator. Colbert is currently Assistant County Administrator – Development Services and oversees Workforce and Economic Development. He will replace Joe Tuss who is retiring at the end of August.

Progress report - Justice Committee for the Montgomery County jail

Thirteen months ago, in response to numerous lawsuits brought against Montgomery County for alleged abuses, the Montgomery County Commissioners and the County Sheriff jointly selected citizens to form a non-partisan Justice Committee charged over two years to review and analyze the strengths, weaknesses and challenges of the jail, and to provide the Sheriff and County Commissioners with recommendations for improvements. The committee is acutely aware that the community is waiting impatiently for its report. This process required a great deal of education about the jail for the committee members. The committee is now offering this progress report after its first year of work.

The Cincinnati Zoo Academy

The Cincinnati Zoo Academy has been a part of the public school system in Cincinnati since 1975. In 1995, the program underwent a substantial change from a strictly vocational program with an emphasis on natural resources and wildlife management to a four year college preparatory program where the students earn vocational degrees by working with zoo keepers for two hours a day. During the 2008 – 2009 school year we initiated a transition and became a Tech Prep program with articulation agreements with UC Blue Ash and Cincinnati State. Students spend their ninth and tenth grade years at the Hughes High School. During their eleventh and twelfth grade years they will spend part of each day at the Zoo Academy on zoo grounds.

University of Dayton to host Antioch writers’ summer workshop

Sharpen your writing and leadership skills at the Antioch Writers Summer Workshop and Center for Leadership events.

WSU softball falls in semi-finals

The Wright State softball team fell in the semifinals of the Horizon League Tournament last weekend, losing 2-1 at the hands of Oakland University.

Cleveland man pleads guilty to stealing $77,000 in federal grants designed to help Native Americans

A Cleveland man pleaded guilty to stealing more than $77,000 in federal grants designed to help Native Americans.